Boca Raton, Fla.—As attitudes towards homeownership continue to change, multi-housing is poised for another good year. “It’s not only OK to live in an apartment, it’s smart to do so. It’s the preferred type of home for a growing segment of the society,” said Tom Bozzuto, CEO, The Bozzuto Group, to industry colleagues at the 2012 National Multi Housing Council annual meeting.

“We can debate whether this [preference] will last for more than a few years. [But] my principal focus as NMHC Chairman will be to push for a balanced housing policy [that ensures] renters are not the subject of economic discrimination as they have been for the past quarter century. It’s incumbent on us to create awareness that rental housing, by its nature, is an important component of affordable housing.”

For many Americans, apartment living is fundamentally a lifestyle choice. But there are other factors at play. College debt is on the rise and making it harder to save and make the jump from renting to homeownership. The days of Mom and Dad gifting a portion of the down payment for a house are over for many young Americans, because their parents’ nest egg took a hit in the stock market… or perhaps Mom and Dad are unemployed.

Will the inventory of rental units be able to meet the demands of the growing renter pool? Probably not. New construction is needed, especially since older housing stock is quickly becoming obsolete. But the danger of overbuilding was a recurring theme during networking conversations at the NMHC Annual Meeting and at the NMHC Apartment Strategies Outlook Conference the day before. “We don’t want to shoot ourselves in our collective foot and overbuild,” said one panelist. “We have to be careful not to turn the faucet on too fast… too soon… or too much.”

The consensus is that the infill sites are running out. The low-hanging fruit has been picked. Some developers, like Holland Partners in the Pacific Northwest, captured early cycle opportunities early—“an advantage of being early and knowing our markets cold,” said Clyde Holland, chief investment officer, Holland Partners.

“We may be returning to a normal market…and back to entitlement risk,” said Keith Harris, chief investment officer, The Laramar Group. “Capital is constrained. Banks are being very careful and are putting limitations on further development. They are being very disciplined and focused.” Experts expect debt and equity capital will likely be no more abundant in 2012 than in 2011—but the cost will be about the same.

Other industry watchers observed that development deals are pretty tight right now. They expect land and construction costs will go up with those markets fully recovered by the first quarter of 2014. Currently “we’re recovering from low prices,” observed one panelist. “This will create another round of broken deals. We will find starts in 2013 and 2014, but until then it will be a challenge.” On the bright side, however, multifamily owners have had pretty robust rental growth around the country in the last 12 months and should continue to see rent growth.

There’s also “great money” to be made for small operators in tertiary markets. Albert Berriz, chief executive officer, McKinley, said he thinks Augusta, GA is a terrific tertiary market. So are Toledo, OH; Carmel, IN; Champaign, IL; Columbia, SC; Norfolk, VA. “When we buy a building we don’t expect to make money for ten years. It’s a slow bake. It’s not a millionaire’s market.” Berriz added, “The foundation of our business is much more the operator. It’s a different mental profile.”

Berriz also remarked that the biggest challenge lately is sifting through the opportunities to get to the best deals. The number of deals to evaluate has been greater, and so has the level of opportunity. “But one bad deal erases four good ones,” he said. “We’re a strong believer in university and college towns and military towns. We want to be near an employer who never goes away.”